infonet-economy

This chapter describes how economic theory (and experience) of the demand for insurance predicts that risk-averse individuals purchase coverage if available at so-called fair premiums, which amount to no more than the expected value of the loss to be covered. In the case of health, additional fi nancial means (provided by coverage) may be even more important when a person is ill than…

The objective of this text is to develop the theory of social health insurance (SHI; the expression used especially in the United States is “public health insurance,” which will be viewed as one variant of SHI here). While a good deal is known about the demand and supply of private insurance, the theoretical basis of SHI is much more fragile. Specifically, on the demand side, what…

We analyze the role of knowhow acquisition in the formation and duration of joint ventures. Two parties become partners in a joint venture to benefit from each other’s knowhow. Joint operations provide each party with the opportunity to acquire part of its partner’s knowhow. A party’s increased knowhow provides the impetus for the dissolution of the joint venture. We characterize the…

This paper analyzes individual decision making under risk. It is assumed that an individualndoes not have a preference relation on the set of risky lotteries. Instead, an individual possesses a probability measure that captures the likelihood of one lottery being chosen over the other. Choice probabilities have a stochastic utility representation if they can benwritten as a non-…

We analyze the interaction between risk sharing and capital accumulation in a stochastic OLG model with production. We give a complete characterization of interim Pareto optimal competitive equilibrium allocations. Furthermore, we provide
tests of Pareto optimality/suboptimality based on (risky) rates of return only.

This paper studies how the investors' attitude towards earnings surprises a®ects the managers' incentives to manipulate earnings in an intertemporal context, where the consensus forecast of the analysts is not exogenously given but determined by the strategic interaction between the analysts and the managers. Our analysis shows that given the asymmetric investors'…

In this paper I demonstrate how one can generalize finitely many examples to statements about (infinite) classes of economic models. If there exist upper bounds on the number of connected components of one-dimensional linear subsets of the set of parameters for which a conjecture is true, one can conclude that it is correct for all parameter values in the class considered, except for…